InvestorQ : Can I buy GAIL in the light of the latest results of the company and that the company is quoting at its low price of the year?
shrinidhi Rajan made post

Can I buy GAIL in the light of the latest results of the company and that the company is quoting at its low price of the year?

Answer
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Riya Dwivedi answered.
1 year ago


GAIL saw quite a bit of capital base expansion in the last 1 year through two bonus issues in the form of 1:3 and again 1:1. This converted 300 shares into 800 shares in a short span of time. The latest results show pressure due to weak oil prices. Despite a rise in natural gas revenues, the company reported a 1.5% fall in profits to Rs.1504 crore. During the same period, the total revenues of the company fell by 3% to Rs.18,467 crore. However, the good news for GAIL was that the EBITDA margin went up by nearly 360 bps to 12.8%,which is a huge expansion.

GAIL is currently available at a P/E ratio of 9.2 and that is a reasonable valuation for a gas company. The limited downside risk at this price surely makes a good buy. Even the dividend yield at 3.5% is quite attractive. However, you must be prepared to wait for at least 1-2 years to get some good returns on this stock.